13 Most Crucial B2B SaaS Marketing Metrics
You Need To Track
No matter how good your B2B SaaS marketing efforts are, there is no such thing as a perfect campaign. There is always room for improvement.
But how do you know which aspects are working well and what needs to be improved?
That comes through tracking the right SaaS metrics.
The thing is that all the strategies and channels involved in B2B SaaS marketing bring their own set of metrics and KPIs into the picture.
How do you know which KPIs to track first?
Get ready to learn as we talk about the 13 most crucial B2B SaaS marketing metrics that you need to track.
1) Website Traffic
Since SaaS marketing is primarily (if not completely) done through digital marketing, your website acts as your storefront.
Therefore, it is important to track website traffic as a B2B SaaS marketing KPI. This includes both organic and paid traffic.
Website traffic gives you an idea of how many people are visiting your website and can be a good indicator of your overall brand awareness.
Plus, if you’re trying to measure your content marketing performance, the number and frequency of visits can be a good indicator of the visibility and quality of your content pages.
The most common way to track your website traffic is through Google Analytics.
There are three specific KPIs that you need to track: traffic source, unique visitors, and returning visitors.
You can use Google Analytics to view where your website traffic is coming from.
Is it from organic search results? Paid search? Social media? Referrals from other websites?
Knowing where your visitors are coming from will help you assess which of your B2B marketing channels are working well and which ones need improvement.
Unique visitors are those who visit your website for the first time.
When someone visits your website for the first time, Google Analytics assigns a unique user ID for them. This user ID is then used to track all subsequent interactions that the visitor has with your website.
The number of unique visitors you have can tell you how well you are promoting your website and content.
If you see a low number of unique visitors, it could be an indication that your website and content are not very visible in your digital marketing channels.
A returning visitor is someone who has visited your website before. They will have a user ID that is already assigned to them in Google Analytics.
The number of returning visitors can give you an idea of the quality of your content.
If you see a high number of returning visitors, it could be a sign that people like what they see on your site and are coming back for more.
2) Lead Velocity Rate (LVR)
Lead velocity rate (LVR) is the speed at which you are generating qualified leads.
It is a good indicator of the overall health of your lead generation efforts.
If you have a high LVR, it means that your marketing efforts are working well and you are generating a good number of qualified leads.
Conversely, if you have a low LVR, it could be an indication that your marketing campaign needs improvement.
Now, notice that we’re talking about qualified leads here.
A qualified lead is a potential customer who has been identified as having a high likelihood of becoming a paying customer.
They at least have to be a marketing qualified lead (MQL), which is someone who has voluntarily given their contact information through one of your marketing assets.
For example, they may have downloaded one of your ebooks or signed up for your email campaign.
To calculate your LVR, take the number of qualified leads you have this month and subtract the number of qualified leads you had last month. Then divide the difference by last month’s number of qualified leads.
3) Conversion Rate
Conversion rate is the percentage of potential customers who take a specific desired action.
The desired action could be anything, depending on the goal of the particular SaaS marketing strategy you’re tracking.
If you’re monitoring the performance of a landing page, the conversion rate would be the percentage of visitors who fill out the form on the page.
If you’re tracking your email marketing campaign, the conversion rate would be the percentage of people who click on a link in your email.
Conversion rate is an important B2B SaaS marketing KPI to track because it tells you how effective you are at moving a potential customer up the customer journey.
4) Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is the amount of money you spend to acquire a new customer. This includes both marketing and sales expenses.
To calculate CAC, divide your total marketing and sales expenses for a period of time by the number of new customers acquired during that same period of time.
For example, if you spend $100,000 on marketing and sales in a month and acquire 100 new customers, your CAC would be $1,000.
CAC is an important marketing metric to track because it tells you how much it costs to acquire a new customer.
This information can help you determine whether or not your marketing efforts are profitable.
5) Monthly Recurring Revenue (MRR)
Monthly recurring revenue (MRR) is the amount of money that you can expect to receive on a monthly basis from your customers.
It is a good indicator of your short-term revenue growth.
Comparing your current MRR with previous ones can give you an idea of whether or not your day-to-day business operations are effective and sustainable.
To calculate your MRR, simply take the total amount of revenue you expect to receive from your customers in a month.
If you have annual or multi-year subscriptions, you will need to break down the revenue into monthly installments.
6) Annual Recurring Revenue (ARR)
Annual recurring revenue (ARR) is the amount of money that you can expect to receive on an annual basis from your customers.
While MRR is mainly an operational metric, ARR is generally a SaaS company valuation metric.
Venture capitalists (VCs) usually look at ARR to assess whether or not a SaaS business is worth investing in.
To calculate ARR, simply take the total amount of money you will receive from all customers this year.
If you have multi-year subscriptions, you can divide the total amount by the number of years in the subscription to get the annual recurring revenue.
7) Average Revenue Per User (ARPU)
As the name suggests, the average revenue per user (ARPU) is the amount of money that you can expect to receive from each customer, on average.
You can calculate either your annual or monthly ARPU.
To calculate ARPU, simply take your total recurring revenue (MRR or ARR) and divide it by your current number of customers.
ARPU can be useful in comparing different customer segments.
For example, let’s say you have customers in two distinct industries.
You can calculate the ARPU for each customer segment and compare them to see which one is more valuable to your business.
8) Customer Retention Rate
Customer retention rate is the percentage of customers who remain subscribed to your service over a certain period of time.
It is a good indicator of customer satisfaction and loyalty.
To calculate your customer retention rate, take the number of customers you had at the beginning of the period and subtract the number of customers who cancel during that period.
Then, divide that number by the number of customers you had at the beginning of the period
For example, if you had 100 customers at the beginning of the month and 10 of them canceled during that month, your customer retention rate would be 90%.
9) Churn Rate
Churn is the action of an existing customer canceling their subscription to your service.
And there are two types of churn that you can track: customer churn and revenue churn.
Customer Churn Rate
Customer churn rate is the percentage of customers who cancel their subscription to your service in a given period of time.
It is the inverse of the customer retention rate.
To calculate the churn rate, take the number of customers that canceled their subscription during a certain period.
Then, divide that number by the number of customers you had at the beginning of the period
For example, if you had 100 customers at the beginning of the month and 4 of them canceled their subscriptions, your customer churn rate would be 4%.
Revenue Churn Rate
The revenue churn rate is the percentage of revenue that is lost due to customers canceling their subscriptions.
To calculate the revenue churn rate, take the total amount of revenue that was lost due to customer cancellations.
Then, divide that number by the total amount of recurring revenue you had at the beginning of the period
For example, if you had an MRR of $1,000 at the beginning of the month and you lost $100 from it due to canceled subscriptions, your revenue churn rate would be 10%.
10) Customer Lifetime Value (CLV)
Customer lifetime value (CLV), also called lifetime value (LTV) is the total amount of money that a customer will spend on your service over the course of their subscription.
To calculate CLV, you need to know two things: your ARPU and average customer lifespan.
Your average customer lifespan is the average amount of time that a customer remains subscribed to your service.
To calculate CLV, simply take your ARPU and multiply it by the average customer lifespan.
For example, if your monthly ARPU is $100 and the average customer lifespan is 24 months, then your CLV would be $2,400.
But what if you don’t have historical data on your customers? How do you calculate CLV without the average customer lifespan?
If you don’t have historical records on your average customer lifespan, you can calculate your CLV by dividing your ARPU by your churn rate.
This gives you a pretty good estimation based on how well you are currently retaining your customers.
For example, if your ARPU is $100 and your churn rate is 4%, then your CLV would be $2,500.
11) CLV/CAC Ratio
Left on their own, your CLV and CAC can only tell you so much about how much you’re spending and how much revenue you’re making.
But if you track them side by side, you can have a better picture of how much return you are getting for your marketing and sales expenses.
That’s where the CLV/CAC ratio comes in.
To calculate the CLV/CAC ratio, simply take your CLV and divide it by your CAC.
For example, if your customer lifetime value is $3,000 and your customer acquisition costs are $1,000, then your CLV/CAC ratio would be 3:1.
But what is a good CLV CAC ratio for SaaS businesses?
Generally, you should aim for 3:1 to 5:1.
If it’s lower than 3:1, it means you’re spending too much to acquire each customer, which could result in slow growth for your SaaS business.
And if it’s higher than 5:1, it could mean that you’re neglecting some opportunities to invest more in customer acquisition. In other words, you’re not fully tapping on your potential for growth.
12) Net Promoter Score (NPS)
The Net Promoter Score (NPS) is a customer satisfaction metric that measures how likely your customers are to recommend your SaaS product to their friends and colleagues.
To find your NPS, you need to survey your customers and ask them how likely they are to recommend your product, on a scale of 0 to 10.
Then classify each customer according to their response:
- Those who answer 9 or 10 are considered “promoters”
- Those who answer 7 or 8 are considered “passives”
- Those who answer 0 to 6 are considered “detractors”
To get the final NPS score, simply take the percentage of promoters and subtract the percentage of detractors.
For example, if 60% of respondents are promoters and 10% are detractors, then your NPS score would be 50.
13) Customer Satisfaction (CSAT) Score
The Customer Satisfaction (CSAT) score is a customer satisfaction metric that measures how happy your customers are with your product or service.
To find your CSAT score, you need to survey your customers and ask them how satisfied they are with your product or service on a scale of 1 to 5.
Then, simply take the percentage of customers who answered 4 or 5, since they are the only ones who are really happy with your SaaS product.
For example, if 80 out of 100 respondents responded with a 4 or 5, then your CSAT score would be 80%.
Final Thoughts About B2B SaaS Marketing Metrics
B2B SaaS marketing can be a complex beast to manage. There are a lot of processes and channels at work.
So if you want to accurately measure your performance, you need the right B2B SaaS Marketing KPIs in place.
We hope this article has given you a good overview of some of the most important B2B SaaS marketing metrics that you should be tracking.
Looking for more guides to help you grow your SaaS company? Check out our blog here.